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Posted at 10:15 AM ET, 02/16/2011

Borders turns page to Chapter 11

By Rob Pegoraro

Yet another analog bookseller has taken a step closer to a digital demise. Borders filed for Chapter 11 bankruptcy this morning, hoping to restructure its finances and reboot its operations.

borders_logo.jpg

The book retailer announced the news this morning. At a site set up for the occasion, Borders comforted customers that "Borders stores are open for business" but warned that it "will be closing underperforming stores within our network over the next several weeks." It says it's lined up $505 million in debtor-in-possession financing to get through its restructuring.

(12:55 p.m. Over on The Buzz, Elizabeth Flock posted details about the Washington-area stores due to close. The list includes the Borders I used to shop at most often, 1801 K Street, as well as locations in Friendship Heights, White Flint, Bowie, Largo, Tysons Corner and Stafford.)

In its filing (PDF), Ann Arbor, Mich.-based Borders Group Inc. listed assets of $1.275 billion and liabilities of $1.293 billion, as of Dec. 25. It has 642 stores in the U.S. and employs about 18,000 people, including full-time, part-time and on-call workers.

The news shouldn't exactly be a surprise. Borders has spent years struggling with its digital strategy, as Fierce Content Management's Ron Miller noted this morning.

Its worst mistake may have been its decision to opt out of online sales: Borders outsourced Web retail to Amazon from 2001 to 2007--then didn't open its own Internet store until May, 2008. More recently, it opted for an all-of-the-above e-books strategy, in which it sold an assortment of third-party e-reader devices instead of developing one of its own.

I'm tempted to compare Borders with another analog-media retail chain fallen on hard times--Blockbuster, which filed for Chapter 11 last year. But while Blockbuster was the video-rental chain a lot of people loved to hate, many readers seemed to like Borders.

I'm afraid the more relevant parallel will be with another bookseller that got run over by the Internet: the District's late, great Olsson's.

What's your forecast for Borders? Will you miss it if it's gone?

By Rob Pegoraro  | February 16, 2011; 10:15 AM ET
Categories:  E-books, Shopping  
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Comments

Good riddance to yet another failed experiment in predatory big-box capitalism. And thanks for helping drive hundreds of locally owned booksellers out of business and replacing decent jobs with minimum wage, dead-end labor. People who want to save a buck at the expense of their community institutions still have Amazon to patronize. Here's hoping Barnes & Noble follows suit.....

Posted by: triangleslim | February 16, 2011 10:31 AM | Report abuse

I may not know everything there is to know about business, but Borders doesn't sound like it is doing too badly with its assets almost able to cover its liabilities. If it can restructure its debt and focus on the more profitable stores, it could come back quickly (assuming it doesn't become too small to matter). I sometimes think that Amazon is too big with way too many non-book items. (I am sorry, but I don't consider Amazon as the go to place for lawn mowers). But, I like going to Amazon for book reviews and recommendations of other books that I might like. I shop at the local Borders and hope they don't have to close my store.

Posted by: mikebecvar | February 16, 2011 10:52 AM | Report abuse

What Border's reminds me of the most is Tower Records.

Also, oblig. Shirky link:
http://www.shirky.com/weblog/2009/11/local-bookstores-social-hubs-and-mutualization/

Posted by: wiredog | February 16, 2011 11:06 AM | Report abuse

As much as I used to like Borders, can't say I'll miss it, since I now go to a Borders maybe once a month. Amazon simply crushed it, on price, selection, ease of browsing, you name it.

Posted by: Observer691 | February 16, 2011 11:24 AM | Report abuse

@triangleslim I have read recently that Barnes & Noble was on the brink of bankruptcy as well. Both of these companies have failed to follow huge changes in their marketplace. Neither can effectively compete against Amazon in pricing which has resulted in their revenue free falling into the basement. While Amazon is not the poster child for being a good retailer it does provide the buyer with the cheapest pricing. That in today's economy is why Amazon is so successful. Just like Blockbuster failed to adapt to the changing DVD rental marketplace both of these book sellers failed to see the handwriting on the wall.

Posted by: Desertdiva1 | February 16, 2011 11:27 AM | Report abuse

If Mr. Pegoraro is suggesting that Nook and bn.com is going to be Barnes & Noble's saving grace I predict a flop. I am yet to see ONE Nook outside a Barnes & Noble's store. I can't imagine why anyone would buy a Nook or shop on bn.com at all. And I can't see how brick-and-mortar stores would help online sales in any meaningful way--if they are bad for Borders, they are bad for B & N.

Posted by: DeepClue | February 16, 2011 11:28 AM | Report abuse

I think the simple reality is that the stores are just too big. They're almost a library, and there simply isn't a demand for all those titles at any and every moment. Scale the size of the stores back, and have a catalog that shoppers can order from both in store and online. Amazon can get you a book in 1-2 days (selecting prime, which i use because at the end of the year I've saved substantially); Borders should be able to do the same. Their supply is way bigger than their demand. Also, they don't need to sell movies and cd's. No one is paying top dollar for cd's and dvd's anymore. get out of that game.

Posted by: oo7 | February 16, 2011 11:28 AM | Report abuse

So I guess I lost all that money on gift cards I got from my kids at Christmas time. My fault for not using it, but when I visited my local Borders recently, the selection was so poor there was nothing worth buying. I used to like this chain, but it has really slid downhill in the last year. The history section used to be three aisles, now down to one with European and medieval history really hit hard.

Posted by: edwardallen54 | February 16, 2011 11:28 AM | Report abuse

I read through a financial report for Books-A-Million several years ago and discovered that a book chain's entire annual profit is derived 100% from unredeemed gift cards.

Posted by: blasmaic | February 16, 2011 11:31 AM | Report abuse

This was expected. When a retailer sells a music cd for example $15 and ALL the competition sells same music CD for $9, you see the problem. I stopped shopping there three years ago because of ther high prices. Also complained to them about music being too expensive at this store, and was told that other stores were not their competition(guess they have finally figured oput that they MUST compete, but already too late). Good riddance to another greedymerchant that doesn't look or listen, and who is getting what they deserve.

Posted by: citigreg | February 16, 2011 11:43 AM | Report abuse

Aside from the loss of jobs, I say good riddance to Borders. Every 'Borders' that I have shopped has had the WORST customer service - coupled with employees who KNOW NOTHING but where the latest Daniel Steel 'novels' are at. I was in one of the stores once and asked where I could find Lillian Hellman, the educated and well read staff member told me 'the cooking section is over there' – I gather she thought that Ms Hellman invented mayonnaise...

Posted by: 35East76thSt10021 | February 16, 2011 11:52 AM | Report abuse

Bookselling goes in cycles. DC had some good independents in the 70s--Discount Book and Records, Savile, Kramerbooks, etc. Then the chains came...Walden, B Dalton, Brentanos and some independents left and others started. Olssons benefited from Discount Books' labor troubles but then the discounting era started with Crown Books, soon to be joined by Borders and Barnes and Noble...many independents died...then Amazon finished off some more and took dead aim at Borders and BN. When electronic books shake out, well-run independents will grow again and the cycle will start over. People forget retail comes and goes...where is Korvettes, S Klein, Montgomery Ward?

Posted by: pdeblin | February 16, 2011 11:54 AM | Report abuse

35East76thSt10021,

Lillian Helman wasn't in the Borders store the day you asked to see her. She usually hangs out at Poetry and Prose.

Posted by: jobro1 | February 16, 2011 12:10 PM | Report abuse

Yes, I already miss Borders as the Downtown Portland, OR store was closed in January. This was the most convenient location to work and I also saved additional $$$ because I didn't have to pay sales tax on my purchases.

I hope thay accelerate their adaptation to a changing marketplace and emerge from Chapter 11 a lean, mean competitive machine.

Posted by: King2641 | February 16, 2011 12:12 PM | Report abuse

I recently visited a Borders. I was amazed about how poor the selection was. The literature section comprised of Dean Koontz books. I agree with the other commenters that DVD and CD prices are non competitive as they are way too high. At least when I go to Barnes and Nobles I can find a better selection of books including their classics that are bound and sold for an unbeatable price.
And well stores and store chains come and go. That is the nature of economy. Adapt or perish.

Posted by: LexandSue | February 16, 2011 12:13 PM | Report abuse

I used to work at a Borders. Before Amazon really came into its own, Borders was the laid-back version of B&N, complete with a surprisingly eclectic music and DVD section. You could find some pretty unusual things, and it was a one-stop media store. Of course, Borders employees were, for the most part, retail cashiers first and book/music/film lovers second (if at all), but that didn't matter when it could offer a wide selection at low prices.

Then Amazon came, offered a massive selection at low prices, and made Borders irrelevant. Indy bookstores can't match the selection, but they can offer ambiance, and employees with expertise who can offer a particular shopping experience you can't get online, or from a big box store. For that matter, indy stores can support their brick-and-mortar sales with online offerings through Amazon. I don't care what Borders (or B&N, which isn't far behind) does to their business model, they just aren't going to be competitive as a chain retailer.

Posted by: whorton1 | February 16, 2011 12:25 PM | Report abuse

I'd just like to add something regarding Barnes and Noble's viability - in addition to developing their own excellent eReader (I say this as a proud owner of a nook), I think their other key strength is in textbooks as they have taken over many university bookstores.

Posted by: royterp | February 16, 2011 12:37 PM | Report abuse


Borders book stores are dreary, disorganized and not inviting. Unless I am looking for a particular title I never set foot in one.

Ask yourselves why the Barnes & Nobel store down the street is still thriving.

Posted by: screwjob23 | February 16, 2011 12:41 PM | Report abuse

A loss of any bookstore is a sad thing.

Posted by: jckdoors | February 16, 2011 12:41 PM | Report abuse

I started shopping at Borders in the original store in downtown Ann Arbor in the early 80s. The staff was helpful and knowledgeable and it was the only place to go to get the obscure lit books for some of the U of M classes. Now the headquarters takes up an entire city block and it has lost what made it special. If you go in now and need a certain book, the staff points you to one of the computers so you have to search yourself to see if they have it in stock or you have to order it on the website. I can do that myself from home. I finally switched to the Kindle and probably won't go back to the store.

Posted by: opheliapenguin | February 16, 2011 12:44 PM | Report abuse

We're just living through a permanent change in the way these products are sold. Amazon is just much, much more efficient for selling books than a brick and mortar store. The "fun" of browsing in a bookstore which probably doesn't have the obscure title you're looking for anyway is more than outweighed by the superior pricing of Amazon.

Over the past several years, I have found that the only times I have gone to a Borders were those few days when I was browsing through books on Amazon, saw a title I wanted and didn't want to wait for shipment (assume it's a weekend), and noticed that Borders had inventory in stock. But that's just impatient me. Most people would just order it from Amazon and wait for it to arrive and save money in the process.

Frankly, much of my reading has now shifted over to e-books as well. And, since I do not like having my e-books spread over several different libraries, I have also found that this has tended to concentrate me at Amazon for that as well.

CDs and DVDs are another matter. For music, I am just as likely to simply buy single songs online - I can't remember the last time I bought a CD or ordered one from Amazon. And as for DVDs, mostly I use Netflix or download from Apple. I think there are quite a few people who do the same.

The distribution model for these kinds of media has simply changed due to the internet. Other than quirky, specialist, niche retail outlets, I don't see how the big box stores can compete with Amazon, Netflix and other web-based businesses in these areas.

Posted by: novaseeker | February 16, 2011 12:47 PM | Report abuse

I like Borders (as well as Barnes and Noble) - it is fun to go in and look around and they have a huge selection. They managed their business poorly though and got hammered.

Posted by: dkoflynn01 | February 16, 2011 1:06 PM | Report abuse

I have always liked Border's. Overall they have a large selection (no bookstore will have everything as some commenters see to think) and I like to browse which you can't do at an online retailer. They also regularly offer 33% and 40% off coupons which B & N doesn't. They have declined though in quality in the past few years (starting with eliminating live music at some of their stores) and there is a lot of variation between different stores. I hope they improve.

Posted by: jeendee | February 16, 2011 1:14 PM | Report abuse

Borders doesn't seem to have done anything right since the brothers who started it sold out and left. They went into CDs in a big way when that market was collapsing. They borrowed big to expand overseas when their competition was here in the U.S. (B&N) and on the Internet. Then, wonder of wonders, they farmed out their Internet business for several years to their really truly major competitor, Amazon. B&N is a mess under the hood (anyone used their customer service lately?) and has missed a lot of boats, but when they finally realized they had to get real with ebooks they hired someone who was not a book-business insider to handle it, and now at least they are in competition. That's why they're still standing...somewhat.

Posted by: truth2power | February 16, 2011 1:26 PM | Report abuse

I was laid off about 6 months ago and can definitely attest to the tough job market. It took some dedicated effort to land a job. I know the jobs are out there, there is just more competition to get them. I will tell you what worked for me.

I broke down and had my resume professionally done. I had been told to do it for some time, but was basically too cheap to pay for it! But in the end it was worth it. The writers know what key words to include to get your resume the attention it deserves. I did my research - there are a lot of services out there that range in price from $40 to $150. I found one that cost $49 - so I didn't pay an arm and a leg. And I believe it was well worth it. I recommend it to anyone on the job hunt.

The service I used was ResumeSolutionsPro.com

Best of Luck to you all!

Posted by: johngolf | February 16, 2011 1:33 PM | Report abuse

I'll miss the Borders at 18th and L as it was convenient for me whenever I wanted to compare items for purchasing on Amazon.com, or for when I was walking downtown and needed a restroom. I'll just have to start visiting a further Barnes & Noble instead.

Posted by: RepealObamacareNow | February 16, 2011 1:34 PM | Report abuse

I was laid off about 6 months ago and can definitely attest to the tough job market. It took some dedicated effort to land a job. I know the jobs are out there, there is just more competition to get them. I will tell you what worked for me.

I broke down and had my resume professionally done. I had been told to do it for some time, but was basically too cheap to pay for it! But in the end it was worth it. The writers know what key words to include to get your resume the attention it deserves. I did my research - there are a lot of services out there that range in price from $40 to $150. I found one that cost $49 - so I didn't pay an arm and a leg. And I believe it was well worth it. I recommend it to anyone on the job hunt.

The service I used was ResumeSolutionsPro.com

Best of Luck to you all!

Posted by: johngolf | February 16, 2011 1:41 PM | Report abuse

Some of the best books I ever purchased, I found only because I was able to stand and leaf through them at Borders or Barnes and Noble. Never would have considered them otherwise. You can't do that on Amazon. Libraries - and I'm in a public library at least twice a week - don't always have the up-to-date stuff.

I think Borders and Barnes and Noble tried too hard to be "places to hang out." Which is what people did. But didn't buy books. Drank coffee, wified, but didn't buy books. Heck, even I'd find books at the bookstore, and then buy them on Amazon.

I can't say there's an easy solution to this tension. Guess I'm (along with Borders and B/N) not building a better mousetrap, eh?

Posted by: huguenotklj | February 16, 2011 2:30 PM | Report abuse

I'm so glad my 2 local Borders are staying open in NOVA. They have different selections than Barnes and Noble. I'm also glad that this bankruptcy must mean that Borders isn't gobbling up Barnes and Noble. I hope the two chains are able to stay around. There's nothing like walking into a good big bookstore and smelling the smell of a good book. Ahhhh...

Posted by: AdventurerVA | February 16, 2011 2:49 PM | Report abuse

We bouight my mother a Cobo e-reader from Borders. It came with 100 books on it already, mostly classics, possibly from the Gutenberg Project. It will take her years to read them. In the meantime, she won't be needing to purchase any e-books from Borders. Thus, by loading up the Cobo with free stuff, Borders has deprived themselves of revenue.

Posted by: richarddenton | February 16, 2011 3:11 PM | Report abuse

I was recently (February 1st) at the Border's flagship store on East Liberty in Ann Arbor. I purchased 3 reduced books at $2.99 each, and the total with Michigan tax came to $9.51. I handed the checkout clerk a $20 and 2 quarters, but I didn't have a penny on me. I asked the guy if he could spot me a penny to avoid receiving change, but he said he didn't have any. I handed him another quarter, and I received $11 plus 24 cents in change. I know times are hard, but I thought this a ridiculous exercise in false economy to hang onto a penny.

Posted by: WaPoJohn | February 16, 2011 5:10 PM | Report abuse

Another remedy Borders might try is separating its beverage and book functions.

I don't understand how any bookstore can expect to make a profit if it operates like a library. Every Borders I've ever visited permits customers to plunk down with latte in hand, anywhere in the store, and read for a long as they like.

Why buy the magazine if you can read the whole thing while snacking and slurping?

And who wants to buy a book or magazine that is supposed to be brand new but is already worn and stained (by those lattes, dontcha know)?

Borders really needs to rethink its sales model...and maybe put some restrictions on those customers who perpetually drink the milk but won't buy the cow.

Posted by: haveaheart | February 16, 2011 5:56 PM | Report abuse

In its heyday, I found Borders to be excellent. Book prices were good and the selection at the larger stores was excellent. The music selection was also good but relatively pricey. I used to shop there because the ability to listen to some of the featured albums was an enjoyable browsing experience. The DVD selection and pricing was never really good and so I almost never picked up those goods there. Over the years, the selection declined and prices skyrocketed. Even with coupons, Borders was significantly more expensive than Amazon. First the Music/DVD sections were gutted or eliminated. Aisle ways were enlarged. Prices were raised. The cheap coffee table discount books pretty much disappeared.


Last Christmas was a real eye opener. I decided to get a few books for a friend. Due to a really hectic holiday season, I was not going to have time to get anything from Amazon. I figured I would pay a bit more but end up with pretty much the same thing as what I would have gotten online. Instead, I found the selection dismal and spent a stressful evening trying to find something for presents. I left with a selection that really was not very satisfying, but allowed me to close out the holiday shopping season. I vowed to never do that again. Amazon will get all of my book dollars in the future.

As I reflect on Borders, I really will miss what they were. I used to love browsing for books and walking out of the store with something to read. The online browsing experience can be much more efficient and effective - but not as enjoyable (at least to me).

What brick and mortar stores need to keep my business is to simply be better than the internet equivalent in some regard. Often they are worse in all respects. A few months ago I decided to buy a new watch. Nothing fancy - just a reliable timepiece in the $30-$40 range. I found what I wanted online. However, I knew the band would have to be adjusted so I went into a few local stores before I found what I wanted in a Target. Then I found out that they no longer did adjustments to the watch bands. So I ended up buying the watch, finding a video on YouTube about how to remove links in a metal band, and making all the watch band adjustments myself. Next time, I will buy online and not even attempt to buy from a brick and mortar store.

Borders is doing what many other stores have already done. They have been taking an outmoded business model and trying to apply it when it is no longer relevant. It is not very smart and it will not end well. Times are changing and to be successful over the long term, stores will have to be adaptable. They will have to offer better value than their competitors.

AST - Royal Oak, MI

Posted by: athornton138336 | February 16, 2011 9:43 PM | Report abuse

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